“My stock is up 10%. Why doesn't my account show the same return?”
Before blaming the broker, check which dollars you are counting.
A US stock can rise in US dollars while delivering a smaller gain in Singapore dollars. It can even rise in USD and lose value in SGD. The stock chart may be perfectly accurate. It is simply answering a different question.
The numbers in this article are hypothetical, not current exchange rates or a report about anyone's portfolio. They show why the currency you measure in belongs inside your trading plan, rather than appearing as a surprise afterwards.
The camera that came with a full refund
Imagine buying a camera overseas for US$1,000. At the time, each US dollar costs S$1.35, so the camera costs you S$1,350.
Later, you return it. The shop refunds the full US$1,000.
“Good. No money lost.”
Except the exchange rate has changed. Each US dollar now buys only S$1.2825. Your refund converts into S$1,282.50, before any fees.
The shop has returned every US dollar. You are still S$67.50 short in Singapore dollars.
Nobody has hidden part of the refund under the counter. The measuring unit changed value between paying and receiving your refund.
That is the starting point for understanding an overseas investment. You own an asset priced in one currency, but you may judge its usefulness in another.
The SEC's international-investing guide identifies exchange-rate changes as a separate source of gains and losses for investors holding foreign assets. Its examples address US investors going abroad; the same conversion arithmetic works in the other direction.
Two moving parts inside one return
Replace the camera with fully paid US shares.
You convert S$13,500 into US$10,000 at S$1.35 per US dollar. The shares rise 10%, making the holding worth US$11,000.
Meanwhile, the SGD value of one US dollar falls 5%, from S$1.35 to S$1.2825.
Your holding is now worth:
US$11,000 × S$1.2825 per US dollar = S$14,107.50.
Compared with S$13,500, that is a gain of S$607.50, or 4.5%.
For a fixed number of shares with no intervening cash flows, the calculation is:
Home-currency return = (1 + stock return) × (1 + currency return) − 1.
Here, currency return means the change in the home-currency value of one US dollar. The quote direction matters. A 5% fall in USD measured in SGD is not the same statement as a 5% rise in SGD measured in USD.
Our example is 1.10 × 0.95 − 1 = 0.045.
Why not simply subtract 5% from 10%? Because the currency change applies to the final US$11,000, including the stock gain. Multiplication captures that interaction.
These examples exclude dividends, fees, taxes, financing and interest. They measure nominal returns, not inflation-adjusted spending power. Actual account returns require the relevant cash flows and costs too.
The currency can help you as well
It is easy to treat foreign exchange as the villain when it reduces a winning trade.
But it works both ways.
If the shares rise 10% and the USD value in SGD also rises 5%, the SGD return is 1.10 × 1.05 − 1, or 15.5%, before costs.
If the shares rise 10% but USD falls 10% against SGD, the result is −1%. If the shares fall 10% while USD rises 10%, the result is also −1%.
Equal and opposite percentages do not neatly cancel because they are applied through multiplication.
This creates an awkward lesson for performance reviews. A strong home-currency result does not necessarily mean your stock selection was equally strong. A disappointing result does not automatically mean the stock trade failed either.
Keep both numbers. The USD return helps assess the share-price decision. The SGD return helps assess what happened to capital measured against SGD needs.
Neither number becomes dishonest simply because the other is different.
Changing the display does not change the exposure
Suppose an app lets you show the same portfolio in USD or SGD.
Selecting SGD can make the account easier to understand. That selection alone does not create a currency hedge or prove that cash has been converted.
For a concrete example, Interactive Brokers describes its base currency as an accounting choice used for statement translation and margin calculations. Its explanation also distinguishes that choice from automatically converting non-base-currency balances.
That is a broker-specific example, not a promise about every account. Check your own provider's cash balances, conversion settings and transaction records.
Three things deserve separate labels: the currency used to quote the shares, the currencies actually held or borrowed, and the currency used to report performance.
An attractive green number on a USD screen does not settle the SGD question. Equally, an SGD valuation moving lower does not mean the broker secretly removed US dollars from your account.
A translated value can change without a conversion transaction. Conversion fees and bid–ask spreads are separate costs when an exchange actually occurs.
Selling the stock may leave the currency decision open
You sell the shares for US$11,000 and leave the proceeds as USD cash.
The stock exposure has ended. The USD cash still has a changing SGD value.
If you later convert it, the exchange rate at that later time affects the SGD proceeds. If you keep it for another US investment, it remains USD cash in the meantime.
“I haven't converted, so the exchange rate doesn't matter” is therefore too broad.
It may not have produced a realized conversion result yet. It still affects the amount of SGD that cash could buy now. And if the money is earmarked for a USD expense, USD may be the more useful reference for that particular goal.
Choose the reference currency from the purpose of the money, not whichever screen produces the nicer percentage.
Why a USD stock is not a pure dollar bet
There is another layer, but do not mix it into the arithmetic twice.
A company's business may earn revenue, pay suppliers or borrow in several currencies. Exchange rates can affect those operations, and investors may respond by changing the share price.
The translation calculation above takes the observed USD share-price return as its starting point. It does not explain every business reason behind that price movement.
So “USD will rise, therefore this US stock will rise” does not follow. Nor does the exchange on which a security trades describe all the currency exposure inside the business.
Separating the layers is useful: analyse the investment on its own merits, then understand how its value translates into the currency relevant to you.
A correct conversion formula is an accounting tool, not a stock forecast.
Should you hedge the currency away?
That depends on the exposure and the purpose. There is no need to turn every beginner into a second full-time currency trader.
A currency hedge aims to offset some exchange-rate movements. It also gives up some benefit when those movements would have helped the unhedged position.
Hedging is not simply a free button marked “remove uncertainty”. UBS's explanation of currency hedging discusses interest-rate differentials, transaction costs and imperfect matching between the hedge and the underlying exposure.
For example, a hedge sized against yesterday's portfolio may no longer match after share prices change. Periodic adjustments and the product's rules matter. Depending on the currency pair and direction, the interest-rate differential can create a cost or benefit; do not assume the same fixed deduction everywhere.
A hedged share class also needs to hedge into the currency relevant to your goal. “Currency hedged” without identifying the target currency is an incomplete answer.
And a currency hedge does not protect you from the stock itself falling.
Before comparing hedged and unhedged choices, compare the same underlying investment, understand the hedge policy and read the full costs. There is no universal winner independent of the investor's needs and the actual product.
Do not copy the share example onto a CFD
Our calculation starts with fully paid shares bought using converted capital.
A CFD is a different contract. Singapore's MoneySense guide explains that CFDs involve leveraged exposure without ownership of the underlying asset, with margin and other risks.
The currency of collateral, how the contract calculates profit and loss, when cash flows are converted, financing and provider charges can all matter. Do not automatically apply the full-share purchase-and-conversion example to a CFD's notional exposure.
Read the contract and account terms. A correct stock example can become a wrong answer when pasted onto a different instrument.
A practical way to review the result
Before entering an overseas position, write down the instrument, funding currency and currency of the money's intended use.
Then separate the return review into the asset's performance, the translation effect and actual costs. Record entry and exit exchange rates using the same quote direction. If there are dividends or additional deposits, include their amounts and dates rather than forcing them into the simple no-cash-flow example.
You do not need a precise currency forecast to ask a useful question: “Would an adverse currency move change whether this position fits the money's purpose?”
Also compare performance consistently. Your SGD portfolio return against a USD benchmark mixes investment performance with a measuring-unit difference. Translate both consistently before deciding what the comparison proves.
This process will not remove losses. It can prevent you from praising the wrong decision, blaming the wrong decision or discovering an exposure only when you need to spend the money.
Back at the refund counter
The camera shop's receipt was correct. The traveller's smaller SGD refund was also correct.
The mistake was assuming that recovering the same number of US dollars meant recovering the same value in Singapore dollars.
Before celebrating “up 10%”, finish the sentence: up 10% in which currency, over which period, and after which costs?
That small habit makes the result considerably harder to misunderstand.